Protectionist policies should protect, not endanger American jobs
Back in November 2012, Hostess Brands, the maker of the iconic Twinkies snack, filed for bankruptcy. While the fall of the company was due to union disagreements, the demise of yet another American bakery firm highlights the fact that confectionery jobs in America are leaving. It’s true unions play a massive role in the continued success or demise of companies conducting labor-intensive food processing. Other factors, however, are at play in the overall loss of American jobs. One of these factors is American policy regarding sugar.
American sugar policy began in 1934 as a means to support growers. This was done by stabilizing prices that had fallen as the result of overproduction. The current mandate is for 44 percent of sugar to come from American sugar beets, 36 percent from sugarcane and 20 percent from imports. The overall sugar policy utilizes price supports, tariffs, marketing allotments, means of disposing of excess sugar production and even allotments for sugar used in ethanol production. The U.S. has also excluded sugar from various free-trade agreements with foreign nations. Truthfully, protectionist policies help safeguard the 60,000 American jobs in the sugar industry, but at what cost?
Recently, a University of Michigan study relayed that the American economy overpays $4.5 billion per year ($15 to $20 per individual) on sugar. While consumers may not directly feel this, the pain is in the squeezed margins of confectionery firms that buy sugar on a bulk basis. A report from the U.S. Department of Commerce International Trade Commission revealed that for every job saved in sugar production, three were lost in confectionery companies. The National Confectioners Association (NCA) purports that between 1997 and 2009 some 112,000 jobs were lost in the confectionery industry. Nestlé has moved some candy production to Europe. Hershey, Brach’s, Bob’s Candies and more companies have moved portions of their production to Mexico and even Canada.
The truth is no one wants to see jobs lost in either confectionery products or sugar production. As NCA President Larry Graham said, “The confectionery industry is not the enemy of the sugar industry; they are our partners in the production of candy, and we need them now and in the future.” The problem, in his opinion, is that the policies are outdated.
Protecting the sugar industry harms not only the confectioners but also the sugar industry in that it is guaranteed support. In so doing, the sugar industry is not forced to develop and compete in a free market, but is instead given a protected status. American policymakers should seriously consider restructuring of sugar policies and formulate legislation that benefits both “big sugar” and “big candy.”
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